Board approves plan for Kansas City, Kan., casino

TOPEKA, Kan. 
A partnership hoping to build a Kansas City, Kan., casino cleared its biggest regulatory hurdle on Tuesday, despite the misgivings of the state board in charge of awarding the contract that the plan's first phase does not include building a hotel.

The Kansas Lottery Gaming Facility Review Board unanimously approved a $521 million project at Kansas Speedway, the Kansas City area's NASCAR track. International Speedway Corp., the track's parent, and Penn National Gaming Inc., of Wyomissing, Pa., are partners in the venture.

They hope to open the casino by early 2012 with 2,300 slot machines and about 90 tables for games such as poker and blackjack. The partners also expect the new gambling to generate $220 million in net revenues in 2013, though others' projections are more conservative.

The partners still face background checks by the Kansas Racing and Gaming Commission, which will regulate the casino, and it has until early March to sign off. But state officials don't expect the checks to take that long because Penn is licensed in other states.

Penn and speedway officials are promising to start building a hotel at the track within two years of the casino's opening or pay financial penalties. Review board members had questioned the delay but ultimately concluded it was reasonable, given the sour economy.

"This is about as good as we're going to get under the circumstances," said review board Chairman Matt All, an attorney from Lawrence.

After two years of discussions among state officials and potential developers, the Penn-ISC partnership was the only remaining bidder for a state contract in Kansas City. The Kansas Lottery owns the new gambling under a 2007 law authorizing such casinos.

Rejection of the Penn-ISC plan would have delayed construction of a casino, and at least one consultant warned that applicants might not come forward again. The state hopes to receive at least $32 million in revenues from the casino in 2013.

"Is it ideal? No, but we understand the constraints of the economic times," said review board member Jackie Vietti, of El Dorado, president of Butler Community College.

The lack of a hotel in the project's first phase was a key issue for review board members.

Kansas law contemplated tourist-drawing "destination" casinos, and many legislators envisioned each having its own hotel. Also, past, unsuccessful proposals for Kansas City – including one pushed by ISC – included them.

Penn and ISC officials said their plan didn't include immediate construction of a hotel because the area around the speedway already has about 1,000 hotel rooms that are, on average, only half full. Instead, they promised a "virtual" hotel through agreements with hotel operators to provide rooms for casino customers and shuttle them around.

They said their companies have enough cash to finance the first phase of their project, but not enough for a hotel.

The review board's consultants said tapping existing offsite hotel rooms, though not ideal for a casino, was reasonable. Lottery and Wyandotte County officials agreed.

"We're not going to let the state of Kansas down," said Tim Wilmott, Penn's president and chief operating officer. "It's going to be one of our bigger properties."